Posted on 07/12/2009 10:20:02 AM PDT by Pride_of_the_Bluegrass
The so-called "green shoots" of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops, the faster it gets back on track. And because this economy fell off a cliff late last fall, they expect it to roar to life early next year. Hence the V shape. Unfortunately, V-shapers are looking back at the wrong recessions. Focus on those that started with the bursting of a giant speculative bubble and you see slow recoveries. The reason is asset values at bottom are so low that investor confidence returns only gradually.
That's where the more sober U-shapers come in. They predict a more gradual recovery, as investors slowly tiptoe back into the market.
Personally, I don't buy into either camp. In a recession this deep, recovery doesn't depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.
Problem is, consumers won't start spending until they have money in their pockets and feel reasonably secure. But they don't have the money, and it's hard to see where it will come from. They can't borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of ten home owners is under water -- owing more on their homes than their homes are worth. Unemployment continues to rise, and number of hours at work continues to drop. Those who can are saving. Those who can't are hunkering down...
(Excerpt) Read more at tpmcafe.talkingpointsmemo.com ...
Yep, hard to spend money you don’t have, unless you’re in
government, then it all belongs to you.
I’m agreeing with Robert Reich????? Help, i’m melting, melting....
The painful truth is that tthe US Economy has changed and it is going to proceed forward under the laws of gravity. The excesses of the past (And the past comprises about the last 40 years) are being absorbed and what emerges will be a very different economic picture - One of slow growth (If any) and reduced purchasing power.
Inflation will accomplish both of these outcomes.
It’s a Recession when the guy next door is laid off and unemployed.
It’s a Depression when you’re laid off and unemployed.
It’s a Recovery when the Democrat Politicians are laid off and unemployed.
Certainly while 0bama is in power!
I think this recession has done me a huge favor. I haven’t been “poor” since I left home at 19 and made my own way. I’ve always afforded whatever I wanted or needed.
In the last four months, I’ve learned to be cheap. I don’t pay retail for anything I absolutely don’t have to. No $4.00 cups of coffee. No fast food. No lunches at restaurants that cater to the business crowd. (I’d forgotten exactly how good PB&J tastes!) No bottled water. No running out daily for tonight’s dinner ingredients. Buying my clothes at the Salvation Army saves bunches. Online purchasing of close outs saves an amazing amount of money.
It’s been easy and fun to focus on keeping the money in my pocket.
We should have listened to Dr. Doom
http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html?_r=1
It will begin when we bring manufacturing back to the states.
I hate to say I agree with Robert Reich, but . . . I agree with Robert Reich.
That will happen when we want to live at the same standard of living as the rest of the world or even lower. No Thanks.
It won’t come back until people living on credit are wiped out of the system!
The middle class is being destroyed and all their wealth is being hoovered up by the evil psycho twins of Washington DC and Wall Street.
This guy is brilliant! He must have been reading some of my replies here on FR. We are on the “frippery” slope. A consumer driven economy with basically non-necessity based employment (fripperies) can’t restart without demand rise which can’t come because lower demand for fripperies. Add 60 to a 100 trillion real deficit, and a half dozen more bubbles to burst, like prime mortgages, credit card debt, commercial real estate collapse and we have THE GREATER DEPRESSION of 2010 thru .....????
I have never pushed the panic button until now and I am pushing and holding it in. I hope I am wrong, and we recover, but I just don’t see the dynamics that will permit that to happen. What will happen, IMHO, is massive gov’t printing of money. A Basic Income Grant to each American from gov’t to pay for necessities and the related inflation.
After run of hyperinflation, which will also be used to pay off our international creditors and the deficit, a new American currency will be created, as in Weimar, and we will restabilize. But, probably a decade or two in the future after complete collapse of what we know now.
Hopefully, we will emerge as a kinder, gentler nation, but who knows. Maybe it will be Mad Max world.
parsy, who is prepared to weld iron grating to the front of his Dodge truck and put spikes on his wheels. (I ain’t wearing no silly looking muzzle though. That looks so gay.)
My son was cut to 4 days a week, he doesn’t have any vacation time but he asked the boss for a week off and he said sure, he was supposed to go home today but called the boss and asked if he could have some more time, the boss told him he didn’t need him until Thursday.
They used to do all the dirt work and sewers in new subdivisions and the only thing keeping them afloat is the old, old, rich customers who need a little work on their properties.
They used to do some state work but that has dried up and they don’t do Federal contracts. My son will be the last to go before the business closes but....
Well, then, Bob...your guy is screwed.
Wow, you are a CNN/MSNBC story waiting to happen. Sounds like the CNN the woman the other day talking about all of the good coming from the current economy -- sure people are going homeless but they are learning to live with less which helps everyone, mostly the environment.
Should the dollar collape, be looking for the Balkinzation of the USA into 4 or 5 separate nations. DC will become slum (most of it already is) and war with the Federal forces will be short since the military won’t get paid.
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